From labor scarcity to supply chain issues, distribution centers were tasked with managing many unique problems since the COVID-19 pandemic began. These issues have eased somewhat in recent months. However, they must still be taken into account when managing an efficient distribution center.
In 2023, there are many challenges and trends that distribution center managers must contend with. Knowing what these trends are should help you create a modern distribution center that’s productive and allows you to meet your revenue and profit goals. In this guide, you’ll learn about the many distribution center trends that will take place in 2023.
Distribution Centers in 2023
In 2023, the distribution center industry is expected to experience significant shifts in technology, sustainability, and operations. When looking specifically at technology, further advancements should be made in artificial intelligence, machine learning, automation, and robotics, all of which are capable of helping you boost warehouse efficiency.
As for sustainability, an increasing number of distribution centers are using energy-saving building materials and equipment. Focusing on sustainability can help your warehouse or distribution center save money. With the new challenges that facility managers face on a regular basis, boosting operational efficiency should be a constant consideration when making improvements.
10. Robotics and Automation
The use of robotics and automation will invariably increase in distribution centers throughout 2023. Robotics are capable of assisting in picking and placing items, which reduces the need for human labor. Less human labor means that you’ll be able to save money in the long run.
Because of the rapid rise in the eCommerce sector and the consequences of COVID-19, many distribution centers are finding it difficult to hire, locate, and keep labor, which means that more money is being spent to acquire talent. In this scenario, distribution centers have access to less resources. The labor shortage should be alleviated with automation and robotics.
Different distribution centers can take different approaches to automation. For instance, smaller warehouses and distribution centers may only be able to integrate automation in a piecemeal manner. It may be too expensive for you to automate everything at the same time. There’s also a chance that the need to shutdown your operations temporarily might not be possible if you maintain a high-throughput facility.
9. Artificial Intelligence (AI)
Distribution centers will likely implement artificial intelligence (AI) to optimize processes and increase efficiency. Artificial intelligence will be used for route optimization, predictive maintenance, and inventory management. As technology improves, artificial intelligence should become more widely adopted throughout the industry.
Once enough AI automated systems are placed in a facility, it becomes possible for these systems to communicate with one another and share information. They can then use the information they have to make the most efficient decisions without input from someone in the facility.
A recent example of AI in manufacturing and distribution processes involves Equashield placing their own machine learning and AI system into their operations to reduce manufacturing bottlenecks and improve fulfillment times. This medical device manufacturer was able to more effectively increase their inventory, reduce their backlogs, and fulfill most of their U.S. orders on time.
Sustainable practices will also be a notable priority for distribution centers throughout 2023. Companies will focus on reducing carbon emissions and waste while also implementing Eco-friendly technologies that help the environment. The more linear supply chain structure that has been used for many years has started to be replaced with one that’s more sustainable and profitable.
The new supply chain structure is referred to as the circular supply chain. In the linear supply chain, raw materials are made into products before being distributed to consumers and used by these individuals until they are discarded. To make sure that waste and costs are effectively lowered, more distribution centers are making sure that discarded materials are eventually used for resale. Creating a circular supply chain means that distribution centers will need to increase their sustainability initiatives, which should happen in 2023.
The adoption of digital technologies will continue to increase in distribution centers throughout 2023. The use of IoT and data analytics should help improve supply chain accuracy and visibility. In recent years, distribution centers have embraced technology in a manner that helps eliminate waste and paper use.
Shifting as much as possible to digital will help you save money and protect the environment. It will also assist you in improving your operations. Performing data analytics on your supply chain allows you to more accurately identify and reduce bottlenecks.
6. Autonomous Vehicles
Autonomous vehicles will be increasingly used for transporting goods within and between distribution centers. These vehicles are ones that don’t need to be operated by an employee. Once integrated into your distribution center operations, you should notice that these vehicles increase efficiency and reduce labor costs.
While autonomous vehicles have been part of the material handling industry for many years, their capabilities have been limited and are only able to be used in very specific picking operations. ASRS systems are designed to pick in a modular pallet rack. However, they are semi-autonomous systems, which means that the results aren’t as effective or efficient as using a forklift.
In comparison, fully autonomous lift and reach trucks are capable of assisting with the picking process at a faster rate than forklifts that are manually operated.
DHL recently implemented these machines into their distribution centers. At the beginning, several issues were detected. For instance, they were initially slower than human-operated vehicles and required an entire team of engineers to fix errors. Over time, however, these issues were fixed, which allowed autonomous lift and reach trucks to perform these tasks more efficiently. Using an autonomous lift truck gives you the quickness and mobility of a lift truck while also allowing you to benefit from the ROI boost and stability provided by automation.
5. Augmented Reality (AR)
Augmented reality (AR) will be used to improve speed and accuracy during picking and packing operations. This is a type of technology that’s accessible via mobile applications and web browsers. The cameras on the AR device are capable of scanning real objects, after which software works to analyze the data and show details about these objects in a 3D format.
An example of AR being used in a distribution center is AR glasses providing visual instructions to workers, which should help reduce errors. The four benefits of using augmented reality apps in your warehouse operations include:
- Hardware is accessible and doesn’t require a substantial investment
- Provides fast-object-tracking
- Offers interactive 3D visualization for products, locations, and units
- Delivers additional automation by eliminating the need for data entry
4. Last-mile Delivery
Last-mile delivery will become a more important focus for distribution centers in 2023. Companies will likely look for ways to optimize their delivery routes and reduce delivery times, which will save money and help with efficiency. Last-mile delivery is the final stage in the distribution process and occurs when an item is moved from a transportation hub to its intended destination.
In recent years, an increasing number of companies and distribution centers are using electric last-mile delivery vehicles to transport packages within the local area. These vehicles have a small carbon footprint and are capable of navigating side streets and broader communities with ease. Today, Amazon is working on creating a fleet of electric delivery vans that should be placed in more than 100,000 cities across the U.S. by 2030.
While small distribution centers don’t have the means to own a fleet of electric vehicles, it’s possible to partner with companies that offer EV solutions. Some standard automakers are also creating electric models of their truck and fleet lineups. Since the auto industry is currently shifting to electric vehicles, you can expect more of them to be on the road in the coming years.
3. Smaller and Nearer Distribution Centers
Throughout 2023, distribution centers will become smaller and more numerous. Companies will search for ways to locate distribution centers closer to urban areas to ensure that delivery is faster and more efficient. In the coming year, warehouse vacancies should drop as companies continue purchasing distribution centers at a high rate.
At the moment, warehouse prices are expensive, which has caused many businesses to invest in more innovative solutions. Along with improving existing warehouse space, neighborhood distribution centers and micro-fulfillment centers have given these companies a more workable solution. Instead of spending money to buy or rent a sizable distribution center, companies are looking to smaller spaces that can be turned into local fulfillment centers.
While there are some local building code and zoning issues that companies may need to contend with, creating smaller distribution centers allows empty retail and office buildings to be converted into spaces that can better serve local residents. As eCommerce continues to grow, these smaller facilities should become more prevalent in the industry.
2. Collaborative Robotics
Collaborative robots will be used to improve efficiency and safety in distribution centers. These robots will work alongside human employees and help them perform tasks that are dangerous or difficult for them. At the moment, consumer demand and labor shortages are high, which means that the use of robotics in the distribution center industry should increase rapidly throughout 2023. It’s estimated that as much as 50,000 robotic warehouses may be developed by 2025.
There are several different types of robotic systems that may be used to deliver goods to customers, which include autonomous mobile robots, drones, and collaborative robots. These robots are designed specifically to work alongside humans in industrial facilities. Many distribution centers are using collaborative robots in combination with an automated storage and retrieval system. When implemented correctly, efficiencies should be maximized.
1. Omni-channel Fulfillment
During 2023, companies will continue to focus on omni-channel fulfillment, which means that companies will use numerous selling channels to fulfill orders and distribute products. Distribution centers will be designed to handle both in-store and online orders to provide customers with seamless shopping experiences.
Because of how much eCommerce has grown, online orders are more common than retail store ones. To make sure that online orders are successfully filled, distribution centers must use new and unique fulfillment strategies to move away from the more traditional distribution model.
Here at QMH, we want to provide our customers with the best solutions for their delivering and distribution center needs. Today, distribution center efficiency is more important than ever if you want to keep customers satisfied and reduce the number of backorders that occur. We have years of experience in optimizing the design of distribution centers and can help you create a highly efficient facility.
Many of the trends mentioned above are made possible with technological advancements. The COVID-19 pandemic damaged the distribution center industry for a few years because of the supply chain and worker retention issues that took place. While some of these issues have been fixed, customers are still buying items at a rapid rate, which means that distribution centers must react quickly to maintain productivity and efficiency in their facilities.